By Gabriel Spitzer

   Large corporate marriages are tough. In effect, it's akin to allowing the relatives to set the wedding date and write the guest list. Read here: regulators.
   And so it is with America Online-Time Warner. First were the months of anguish waiting for the Federal Trade Commission to give its okay. Now in apparent stall mode is the Federal Communications Commission, an agency where the craft of delay has been polished to an art form.
    But that could change soon, perhaps as early as this Thursday, amid reports that key commissioners have wrung the critical concessions they've been seeking.
    Just what those concessions are is not known, since the negotiations are most back-door in nature, and they will not be known until approval is announced. The two companies are then expected to move speedily to formally approve the deal.
    While the haggling has been over issues that seem quite technical, in many cases over technologies that have yet to fully emerge, the conditions the FCC imposes, if any, could have wide practical effects for advertising across these new technologies.  
   The FCC's mandate is to ensure that the behemoth that emerges from the merger, the largest in history, is not in a position to use its huge market clout to discriminate against competing providers' content and delivery systems.
   Unlike their FTC counterparts, FCC commissioners can cast their individual votes at any time, meaning that as soon as three of the five members agree the review process is effectively over and approval a done deal.
  At least one commissioner, Harold Furchtgott-Roth, has already cast his vote to approve the merger.
   Several weeks ago, as the FTC was giving its okay, it was assumed that the only real issue before the FCC would be AOL’s instant messaging service.
    Corporate rivals, led by Microsoft, have been insisting that the FCC stipulate that a merged AOL-Time Warner must allow its instant messaging clients to talk to customers of other services, such as Microsoft’s MSN Messenger Service. Instant messaging, though not now huge, is considered one of those internet gizmos that could explode in coming years.
     But since then opponents have brought forward several other demands. 
   They include nondiscriminatory provisions related to interactive television, a condition requiring AOL-Time Warner to make room for at least one regional and one local ISP on Time Warner’s cable pipeline in each market, and open-access to rival ISPs for business-class service.
   The companies have reportedly already agreed to share their instant messaging customers with at least one rival (presumably Microsoft), though competitors are not yet satisfied.
   The interactive TV issue, like most of the other objections competitors have raised throughout the merger review process, has to do with ensuring that AOL-Time Warner does not discriminate against competing providers of content.
   Companies like Disney fear that AOL-Time Warner could block data that enables the interactive components of rival content-providers’ signals. For example, an AOL- Time Warner customer might receive interactive capabilities for CNN/SI, but not for ESPN.
   Last week, Gemstar-TV Guide filed a notice with the FCC expressing its concern that AOL-Time Warner might choose to block competitors’ interactive program guides, providing only its own guide, which could ostensibly be used to steer customers toward AOL Time Warner’s content.
    The problem regulators face with interactive TV is that it's still such an infant industry, and for that reason the FCC could choose to leave it alone entirely.
    "How do you regulate an industry that doesn’t exist yet? These are pretty big issues. It could be difficult for the FCC to do this quickly and still address everything," says Jessica Reif Cohen, Merrill-Lynch’s star media analyst.
    It is far from clear how the FCC will rule on the other issues, if at all.
   "These regulators are really inscrutable," says W. Scott McCollough, attorney for the Texas Internet Service Provider Association, which has become a noisy advocate for small- and medium-sized ISPs.
    McCollough and crew argue that if in fact there is room on Time Warner’s cables for only seven to 10 ISPs, as the companies contend, slots ought to be designated for the little guys.
    "Seven is not that many; that could quickly be absorbed by the large, national ISPs—your Earthlinks, your Junos, your Microsofts. So in the interest of diversity, we think that a slot should be reserved for a regional ISP, and one should be reserved for a local ISP," says McCollough.
   Last week the FCC asked the ISPs to submit definitions for "regional" and "local" ISPs, as well as "business-class service." The definitions should be filed sometime today.
   Stephen Heins of the Wisconsin-based ISP NorthNet, who became the ringleader on behalf of small ISPs throughout the FTC review, believes that for good or ill, a decision is imminent.
   "I’ll bet it’s done before Inauguration Day, and I wouldn’t be surprised if it’s done this week. It gives all the appearances of being a very close vote, but I can’t imagine it not going through. 
   "And all along we haven’t once said that they should veto the merger. We just said it shouldn’t go through as it was," he explains.
   Heins also emphasizes the importance to small ISPs of AOL-Time Warner providing open access to competitors in its non-residential service. The companies so far have given no indication that they are willing to allow competitors to provide service to businesses over Time Warner’s pipes.
   But it doesn’t seem terribly likely that the FCC will weigh in on both issues.
   "We really want them to deal with the business-class service issue, but if we had to pick one it would be the provision for small and regional ISPs," says Heins.
   Nevertheless, Heins retains his trademark optimism.
   "If I wasn’t optimistic back in the summertime when nobody was listening, we wouldn’t have gotten this far."

-Gabriel Spitzer is a staff writer for Media Life.

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